UPDATE 1-Embraer military cargo jet makes successful first flight

SAO PAULO Feb 3 (Reuters) - Embraer's new military cargo
jet flew for the first time on Tuesday and the planemaker is
making progress on collecting late government payments in the
next few months, the company's defense chief said in an
interview.

Brazil's defense ministry has invested heavily in the KC-390
program, covering $2 billion in development costs and signing a
7.2 billion reais ($2.7 billion) order for 28 planes last year.

But a tight federal budget led the defense ministry to push
payment on some projects from late last year into 2015, leading
Embraer to warn of negative 2014 cash flow.

"We expect that should be resolved in the first months of
the year, especially regarding the KC-390, but that didn't
affect the timeline of the project," Schneider said.

He added that the first flight of the new cargo jet, the
largest plane ever made in Latin America, was "excellent" and
lasted about an hour and a half.

The milestone should help move along negotiations with some
of the three dozen countries that sent representatives to the
October rollout of the first KC-390 prototype, Schneider said.

Argentina, Colombia, Chile, Portugal and the Czech Republic
have together expressed interest in 32 of the new cargo jets.
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